economics medium True/False

The 'Carbon Border Adjustment Mechanism' (CBAM) proposed by the European Union is essentially a tariff levied on carbon-intensive imported goods to prevent 'carbon leakage' and protect domestic industries.

  1. True
  2. False

Answer: True

CBAM is a landmark climate policy that forces importers to buy certificates corresponding to the carbon price they would have paid if the goods were produced under EU carbon pricing rules. It aims to prevent 'carbon leakage'—where EU companies move production to countries with lax climate laws—and forces global trading partners like India to decarbonize their export sectors.

Topic International Economics - Sustainability
Exam Relevance UPSC Prelims, SSC CGL
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